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Genesee & Wyoming Reports Results for the Third Quarter of 2017

Category:

Tuesday, October 31, 2017 6:00 am EDT

Dateline:

DARIEN, Conn.

Public Company Information:

NYSE:
GWR
US3715591059

DARIEN, Conn.--(BUSINESS WIRE)--Genesee & Wyoming Inc. (G&W) (NYSE:GWR)

Third Quarter 2017 Consolidated Highlights Compared with Third Quarter 2016

  • Operating revenues increased 15.2% to $576.9 million from $501.0 million.
  • Reported operating income increased 21.4% to $111.5 million; Adjusted operating income increased 20.3% to $115.9 million.(1)
  • Reported diluted earnings per common share (EPS) decreased 18.4% to $0.80 with 62.5 million weighted average shares outstanding, compared with reported diluted EPS in the third quarter of 2016 of $0.98 with 58.2 million weighted average shares outstanding; Adjusted diluted EPS decreased 1.2% to $0.81.(1)
  • Net cash provided by operating activities increased $46.8 million; Free cash flow and Free cash flow attributable to G&W increased $42.8 million.(1)

Third Quarter Segment Highlights

  • North America: Operating revenues from G&W's North American Operations increased 2.8% to $318.9 million from $310.2 million, primarily due to new operations. Reported operating income from G&W's North American Operations decreased 5.8% to $82.1 million; Adjusted operating income from G&W's North American Operations decreased 5.9% to $83.0 million.(1)
  • Australia: Operating revenues from G&W's 51.1% owned Australian Operations increased 50.1% to $81.3 million from $54.2 million, primarily due to new operations as well as an increase in metallic ores revenues and agricultural products revenues. Reported operating income from G&W's Australian Operations increased to $22.3 million from $4.4 million; Adjusted operating income from G&W's Australian Operations increased to $21.8 million from $7.4 million.(1)
  • U.K./Europe: Operating revenues from G&W's U.K./European Operations increased 29.3% to $176.7 million from $136.7 million, primarily due to new operations. Reported operating income from G&W's U.K./European Operations increased to $7.1 million from $0.3 million; Adjusted operating income from G&W's U.K./European Operations increased to $11.0 million from $0.7 million.(1)

Jack Hellmann, Chairman, President and CEO of G&W commented, “In the third quarter of 2017, we reported financial results that were modestly weaker than expected, with reported diluted EPS of $0.80 and adjusted diluted EPS of $0.81. In North America, our same railroad shipments declined 1.9% in the third quarter, primarily due to lower agricultural products carloads caused by drought in the Midwest. Overall we were pleased with the performance of our North American operating team in the third quarter as we successfully navigated through two hurricanes and related precautionary shutdowns of several short lines. In addition, we completed the formation of our CG Railway 50-50 joint venture through which we now provide rail ferry service from Mobile, Alabama to Coatzacoalcos, Mexico.”(1)

“In the U.K./Europe, the turn-around in our financial performance was right on target and business conditions have continued to improve. In Australia, although shipments of coal were disrupted by strikes at certain customer mines in the Hunter Valley in the third quarter, the structure of our contract mitigated much of the financial impact and we also commenced spot movements of coal for new customers.”

Mr. Hellmann continued, “Our outlook for G&W remains positive. In North America, although we continue to face weather-driven variability in our grain and coal shipments, broader economic activity is solid and we expect to benefit from a tightening trucking market. In Australia, we are pursuing multiple new projects amidst an improved commodity price environment. In the U.K., multiple revenue and efficiency measures have taken effect and we see a good peak season for intermodal shipments in the months ahead. Finally, we continue to generate strong free cash flow and to evaluate a range of acquisition and investment opportunities across our global footprint of railroads.”

Financial Results

G&W's operating revenues increased $75.9 million, or 15.2%, to $576.9 million in the third quarter of 2017, compared with $501.0 million in the third quarter of 2016. G&W's operating income in the third quarter of 2017 was $111.5 million, compared with $91.9 million in the third quarter of 2016. G&W's adjusted operating income in the third quarter of 2017 was $115.9 million, compared with $96.4 million in the third quarter of 2016.(1)

Reported net income attributable to G&W in the third quarter of 2017 was $50.2 million, compared with reported net income of $56.8 million in the third quarter of 2016. Excluding the net impact of certain items affecting comparability between periods discussed below, G&W's adjusted net income in the third quarter of 2017 was $50.6 million, compared with $47.9 million in the third quarter of 2016.(1)

G&W's reported diluted EPS in the third quarter of 2017 were $0.80 with 62.5 million weighted average shares outstanding, compared with reported diluted EPS in the third quarter of 2016 of $0.98 with 58.2 million weighted average shares outstanding. G&W's adjusted diluted EPS in the third quarter of 2017 were $0.81 with 62.5 million weighted average shares outstanding, compared with adjusted diluted EPS in the third quarter of 2016 of $0.82 with 58.2 million weighted average shares outstanding.(1)

Impact of Glencore Rail (NSW) Pty Limited (GRail) Acquisition on G&W Financial Presentation

In conjunction with the December 1, 2016 acquisition of GRail, G&W issued a 48.9% equity stake in G&W’s Australian subsidiary, G&W Australia Holdings LP (GWA), the holding company for all of G&W's Australian businesses, to Macquarie Infrastructure and Real Assets (MIRA). G&W retained a 51.1% interest in GWA and continues to consolidate 100% of GWA in its financial statements and reports a noncontrolling interest for MIRA’s 48.9% equity ownership. As a result, G&W’s third quarter 2017 operating income includes 100% of the Australian business, while net income attributable to G&W reflects its 51.1% ownership position in the Australian business.

Prior to the GRail acquisition, G&W's Australian Operations provided rail operator services to GRail, which were recorded as freight-related revenues. These freight-related services continued post acquisition, but are eliminated in consolidation. Revenues from the GRail acquisition are now included in G&W’s consolidated freight revenues from new operations.

Items Affecting Comparability

In the third quarter of 2017 and 2016, G&W's results included certain items affecting comparability between the periods that are set forth in the following table (in millions, except per share amounts):

     

Income/(Loss)
Before Income
Taxes Impact

After-Tax Net
Income/(Loss)
Attributable to
G&W Impact

Diluted EPS
Impact

Three Months Ended September 30, 2017

Corporate development and related costs $ (1.7 ) $ (1.4 ) $ (0.02 )
Restructuring costs $ (2.6 ) $ (2.2 ) $ (0.04 )
Unrecognized tax benefits $ $ 3.3 $ 0.05
 

Three Months Ended September 30, 2016

Corporate development and related costs $ (4.3 ) $ (3.1 ) $ (0.05 )
Restructuring costs $ (0.2 ) $ (0.2 ) $
Impact of reduction in U.K. tax rate $ $ 4.3 $ 0.07
Q3 2016 Short Line Tax Credit $ $ 7.8 $ 0.13
 

In the third quarter of 2017, G&W's results included restructuring costs of $2.6 million, primarily in G&W's U.K./Europe Region, as well as corporate development and related costs of $1.7 million, primarily related to the acquisition and integration of Pentalver Transport Limited (Pentalver). The third quarter of 2017 also included the recognition of $3.3 million of previously unrecognized tax benefits resulting from the lapse of the statute of limitations on acquired liabilities for uncertain tax positions.

In the third quarter of 2016, G&W's results included corporate development and related costs of $4.3 million, primarily associated with the GRail and Providence and Worcester acquisitions, as well as restructuring costs of $0.2 million, primarily associated with G&W's U.K./Europe Region. The third quarter of 2016 also included an income tax benefit of $7.8 million associated with the United States Short Line Tax Credit, which expired on December 31, 2016, as well as an income tax benefit of $4.3 million associated with a reduction in the U.K. income tax rate, which was enacted in September 2016.

Third Quarter Results by Segment

Operating revenues from G&W's North American Operations increased $8.7 million, or 2.8%, to $318.9 million in the third quarter of 2017, compared with $310.2 million in the third quarter of 2016. North American Operations revenues increased primarily due to $9.7 million from new operations.

North American Operations traffic increased 5,698 carloads, or 1.4%, to 407,697 carloads in the third quarter of 2017. Excluding 13,366 carloads from new operations, same railroad traffic decreased 7,668 carloads, or 1.9%. The traffic decrease was principally due to decreases of 6,896 carloads of agricultural products traffic (primarily in the Central, Midwest and Western regions), 2,164 carloads of coal and coke traffic (primarily in the Western and Midwest regions) and 1,454 carloads of food and kindred products traffic (primarily in the Western Region), partially offset by increases of 1,844 carloads of autos and auto parts traffic (primarily in the Midwest and Western regions) and 1,669 carloads of metals traffic (primarily in the Northeast Region). All remaining traffic decreased by a net 667 carloads.

G&W's North American Operations had operating income of $82.1 million in the third quarter of 2017, compared with $87.2 million in the third quarter of 2016. The operating ratio for North American Operations was 74.3% in the third quarter of 2017, compared with an operating ratio of 71.9% in the third quarter of 2016. Adjusted operating income from G&W's North American Operations in the third quarter of 2017 was $83.0 million, compared with adjusted operating income of $88.3 million in the third quarter of 2016. The adjusted operating ratio for North American Operations was 74.0% in the third quarter of 2017, compared with an adjusted operating ratio of 71.5% in the third quarter of 2016.(1)

Operating revenues from G&W's Australian Operations increased $27.1 million, or 50.1%, to $81.3 million in the third quarter of 2017, compared with $54.2 million in the third quarter of 2016. Excluding $17.7 million of net revenues from new operations and a $2.2 million increase due to the impact of foreign currency appreciation, Australian Operations same railroad revenues increased $7.2 million, or 12.7%, primarily due to an increase in metallic ores and agricultural products freight revenues.(2)

Australian Operations traffic increased 80,119 carloads to 123,651 carloads in the third quarter of 2017. Excluding 81,142 carloads from new operations, same railroad traffic declined 1,023 carloads, or 2.3% in the third quarter of 2017, compared with the third quarter of 2016. The traffic decrease was principally due to a decrease of 9,079 carloads of minerals and stone traffic, partially offset by increases of 4,539 carloads of agricultural products traffic and 3,508 carloads of metallic ores traffic. All remaining traffic increased by a net nine carloads.

G&W's Australian Operations had operating income of $22.3 million in the third quarter of 2017, compared with $4.4 million in the third quarter of 2016. The operating ratio for Australian Operations was 72.6% in the third quarter of 2017, compared with an operating ratio of 91.9% in the third quarter of 2016. Adjusted operating income from G&W's Australian Operations was $21.8 million in the third quarter of 2017, compared with adjusted operating income of $7.4 million in the third quarter of 2016. The adjusted operating ratio for Australian Operations was 73.2% in the third quarter of 2017, compared with an adjusted operating ratio of 86.4% in the third quarter of 2016.(1)

Operating revenues from G&W's U.K./European Operations increased $40.1 million, or 29.3%, to $176.7 million in the third quarter of 2017, compared with $136.7 million in the third quarter of 2016. Excluding $39.2 million from new operations and a $2.1 million increase due to the impact of foreign currency appreciation, U.K./European same railroad revenues decreased $1.3 million, or 0.9%, primarily due to a decrease in Continental Europe intermodal revenues following the discontinuation of certain intermodal train services as part of the restructuring of ERS Railways B.V. (ERS) in the first half of 2017 and decreased U.K. infrastructure revenues, partially offset by increased crewing revenues.(2)

U.K./European Operations traffic decreased 11,503 carloads, or 3.9%, to 282,780 carloads in the third quarter of 2017. The traffic decrease was principally due to decreases of 9,996 carloads of intermodal traffic (primarily in Continental Europe) and 5,478 carloads of coal and coke traffic (primarily in the U.K.), partially offset by an increase of 3,846 carloads of minerals and stone traffic (primarily in Poland). All remaining traffic increased by 125 carloads.

G&W's U.K./European Operations had operating income of $7.1 million in the third quarter of 2017, compared with $0.3 million in the third quarter of 2016. The operating ratio for U.K./European Operations was 96.0% in the third quarter of 2017, compared with an operating ratio of 99.8% in the third quarter of 2016. Adjusted operating income from G&W's U.K./European Operations was $11.0 million in the third quarter of 2017, compared with adjusted operating income of $0.7 million in the third quarter of 2016. The adjusted operating ratio for U.K./European Operations was 93.8% in the third quarter of 2017, compared with an adjusted operating ratio of 99.5% in the third quarter of 2016.(1)

Free Cash Flow and Free Cash Flow Attributable to G&W (1)

G&W's free cash flow and free cash flow attributable to G&W for the nine months ended September 30, 2017 and 2016 was as follows (in millions):

 
Nine Months Ended
September 30,
2017   2016
Net cash provided by operating activities $ 350.4 $ 303.6

Net cash used in investing activities, excluding new business
investments

(229.9 ) (108.7 )
Net cash used for acquisitions/divestitures(a) 113.0   1.3  
Free cash flow before new business investments 233.4 196.2
New business investments, net of grants from outside parties (3.0 ) (8.6 )
Free cash flow and free cash flow attributable to G&W(1)(b) $ 230.4   $ 187.6  
 
(a)   The 2017 period primarily consisted of net cash used for the acquisitions of Pentalver, Heart of Georgia Railroad, Inc. (HOG) and a 50% joint venture in CG Railway, LLC (CGR) as well as $7.5 million in cash paid for incremental expenses related to the purchase and integration of these acquisitions, partially offset by $2.9 million of proceeds received from a working capital adjustment related to the GRail acquisition and $2.1 million of proceeds from the sale of a noncontrolling interest in North America.
(b) Free cash flow attributable to G&W is defined as Free cash flow less any distributions made to noncontrolling interest (MIRA 48.9% of GWA).
 

Conference Call and Webcast Details

As previously announced, G&W's conference call to discuss financial results for the third quarter of 2017 will be held on Tuesday, October 31, 2017, at 11 a.m. EDT. The dial-in number for the teleconference in the U.S. is (800) 230-1059; outside the U.S. is (612) 234-9959, or the call may be accessed live over the Internet (listen only) at www.gwrr.com/investors. Management will be referring to a slide presentation that will also be available at gwrr.com/investors. The webcast will be archived at www.gwrr.com/investors until the following quarter's earnings press release. Telephone replay is available for 30 days beginning at 1 p.m. EDT on October 31, 2017, by dialing (800) 475-6701 (or outside the U.S., dial 320-365-3844). The access code is 405460.

About G&W

G&W owns or leases 122 freight railroads organized in nine locally managed operating regions with 8,000 employees serving 3,000 customers. During the third quarter of 2017, our Mountain West Region railroads were consolidated into our Central and Pacific regions, and our Pacific Region was renamed the Western Region. This consolidation reduced our number of operating regions from ten to nine.

  • G&W's seven North American regions serve 41 U.S. states and four Canadian provinces and include 115 short line and regional freight railroads with more than 13,000 track-miles.
  • G&W's Australia Region serves New South Wales, the Northern Territory and South Australia and operates the 1,400-mile Tarcoola-to-Darwin rail line. The Australia Region is 51.1% owned by G&W and 48.9% owned by a consortium of funds and clients managed by Macquarie Infrastructure and Real Assets.
  • G&W's U.K./Europe Region includes the U.K.'s largest rail maritime intermodal operator and second-largest freight rail provider, as well as regional services in Continental Europe.

G&W subsidiaries and joint ventures also provide rail service at more than 40 major ports, rail-ferry service between the U.S. Southeast and Mexico, transload services, contract coal loading, and industrial railcar switching and repair.

From time to time, we may use our website as a channel of distribution of material company information. Financial and other material information regarding G&W is routinely posted on and accessible at www.gwrr.com/investors. In addition, you may automatically receive email alerts and other information about us by enrolling your email address in the "Email Alerts" section of www.gwrr.com/investors. The information contained on or connected to our Internet website is not deemed to be incorporated by reference in this press release or filed with the SEC.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains forward-looking statements regarding future events and the future performance of Genesee & Wyoming Inc. that are based on current expectations, estimates and projections about our industry, our business and our performance, management’s beliefs, and assumptions made by management. Words such as “anticipates,” “intends,” “plans,” “believes,” “could,” “should,” “seeks,” “expects,” “will,” “estimates,” “trends,” “outlook,” variations of these words and similar expressions are intended to identify these forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to forecast, including the following: risks related to the operation of our railroads; severe weather conditions and other natural occurrences that could result in shutdowns, derailments, railroad network and port congestion or other substantial disruption of operations; customer demand and changes in our operations or loss of important customers; exposure to the credit risk of customers and counterparties; changes in commodity prices; consummation and integration of acquisitions; economic, political and industry conditions, including employee strikes or work stoppages; retention and contract continuation; legislative and regulatory developments, including changes in environmental and other laws and regulations to which we or our customers are subject; increased competition in relevant markets; funding needs and financing sources, including our ability to obtain government funding for capital projects; international complexities of operations, currency fluctuations, finance, tax and decentralized management; challenges of managing rapid growth, including retention and development of senior leadership; unpredictability of fuel costs; susceptibility to and outcome of various legal claims, lawsuits and arbitrations; increase in, or volatility associated with, expenses related to estimated claims, self-insured retention amounts, and insurance coverage limits; consummation of new business opportunities; decrease in revenues and/or increase in costs and expenses; susceptibility to the risks of doing business in foreign countries; uncertainties arising from a referendum in which voters in the United Kingdom (U.K.) approved an exit from the European Union (E.U.), commonly referred to as Brexit; our ability to integrate acquired businesses successfully or to realize the expected synergies associated with acquisitions; risks associated with our substantial indebtedness; failure to maintain satisfactory working relationships with partners in Australia; failure to maintain an effective system of internal control over financial reporting as well as disclosure controls and procedures and others including, but not limited to, those noted in our 2016 Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q under “Risk Factors.” Therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Forward-looking statements speak only as of the date of this press release or as of the date they were made. G&W does not undertake, and expressly disclaims, any duty to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

 
1. Adjusted operating income, adjusted operating ratio, adjusted net income attributable to G&W, adjusted diluted earnings per common share (EPS), free cash flow and free cash flow attributable to G&W are non-GAAP financial measures and are not intended to replace financial measures calculated in accordance with GAAP. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to their most directly comparable financial measures calculated in accordance with GAAP, is included in the tables attached to this press release.
 
2. Foreign exchange impact is calculated by comparing the prior period results translated from local currency to U.S. dollars using current period exchange rates to the prior period results in U.S. dollars as reported.
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(in thousands, except per share amounts)
(unaudited)
 
  Three Months Ended   Nine Months Ended
September 30, September 30,
2017   2016 2017   2016
OPERATING REVENUES $ 576,927 $ 501,002 $ 1,636,468 $ 1,484,993
OPERATING EXPENSES 465,438   409,151   1,346,185   1,248,952  
OPERATING INCOME 111,489 91,851 290,283 236,041
INTEREST INCOME 463 416 1,271 827
INTEREST EXPENSE (28,281 ) (17,333 ) (80,431 ) (53,049 )
OTHER INCOME/(LOSS), NET 221   1,494   (289 ) 2,947  
INCOME BEFORE INCOME TAXES 83,892 76,428 210,834 186,766
PROVISION FOR INCOME TAXES (30,507 ) (19,643 ) (82,032 ) (54,563 )
NET INCOME $ 53,385 $ 56,785 $ 128,802 $ 132,203

LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST

3,145     6,317    

NET INCOME ATTRIBUTABLE TO GENESEE &
WYOMING INC.

$ 50,240   $ 56,785   $ 122,485   $ 132,203  

BASIC EARNINGS PER COMMON SHARE
ATTRIBUTABLE TO GENESEE & WYOMING INC.
COMMON STOCKHOLDERS:

$ 0.82   $ 0.99   $ 1.99   $ 2.31  
WEIGHTED AVERAGE SHARES - BASIC 61,629   57,266   61,518   57,160  

DILUTED EARNINGS PER COMMON SHARE
ATTRIBUTABLE TO GENESEE & WYOMING INC.
COMMON STOCKHOLDERS:

$ 0.80   $ 0.98   $ 1.96   $ 2.28  
WEIGHTED AVERAGE SHARES - DILUTED 62,477   58,180   62,399   58,083  
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2017 AND DECEMBER 31, 2016
(in thousands)
(unaudited)
 
  September 30,   December 31,
2017 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 80,277 $ 32,319
Accounts receivable, net 415,802 363,923
Materials and supplies 55,368 43,621
Prepaid expenses and other 39,464   45,475
Total current assets 590,911   485,338
PROPERTY AND EQUIPMENT, net 4,628,894 4,503,319
GOODWILL 1,187,189 1,125,596
INTANGIBLE ASSETS, net 1,575,900 1,472,376
DEFERRED INCOME TAX ASSETS, net 3,120 2,671
OTHER ASSETS 43,154   45,658
Total assets $ 8,029,168   $ 7,634,958
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 31,139 $ 52,538
Accounts payable 254,555 266,867
Accrued expenses 168,168   159,705
Total current liabilities 453,862   479,110
LONG-TERM DEBT, less current portion 2,353,524 2,306,915
DEFERRED INCOME TAX LIABILITIES, net 1,252,499 1,162,221
DEFERRED ITEMS - grants from outside parties 315,113 301,383
OTHER LONG-TERM LIABILITIES 220,491 198,208
TOTAL EQUITY 3,433,679   3,187,121
Total liabilities and equity $ 8,029,168   $ 7,634,958
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(in thousands)
(unaudited)
 
  Nine Months Ended
September 30,
2017   2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 128,802 $ 132,203
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 186,509 151,095
Stock-based compensation 13,354 13,835
Deferred income taxes 51,231 25,088
Net (gain)/loss on sale and impairment of assets (1,096 ) 11,993

Changes in assets and liabilities which provided/(used) cash, net of effect of
acquisitions:

Accounts receivable, net (18,020 ) (10,731 )
Materials and supplies 8,998 (2,642 )
Prepaid expenses and other 14,257 (1,930 )
Accounts payable and accrued expenses (41,529 ) (29,484 )
Other assets and liabilities, net 7,883   14,156  
Net cash provided by operating activities 350,389   303,583  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (149,105 ) (159,523 )
Grant proceeds from outside parties 15,998 29,952
Cash paid for acquisitions, net of cash acquired (107,586 )
Proceeds from the sale of investment 2,100
Insurance proceeds for the replacement of assets 1,406 10,319
Proceeds from disposition of property and equipment 4,238   2,003  
Net cash used in investing activities (232,949 ) (117,249 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on revolving line-of-credit, long-term debt and capital leases (498,925 ) (501,087 )
Proceeds from revolving line-of-credit and long-term borrowings 418,735 300,495
Proceeds from employee stock purchases 8,003 5,969
Treasury stock purchases (3,275 ) (3,065 )
Net cash used in financing activities (75,462 ) (197,688 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 5,980   1,779  
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 47,958 (9,575 )
CASH AND CASH EQUIVALENTS, beginning of period 32,319   35,941  
CASH AND CASH EQUIVALENTS, end of period $ 80,277   $ 26,366  
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
2017   2016 2017   2016
Amount  

% of
Revenue

Amount  

% of
Revenue

Amount  

% of
Revenue

Amount  

% of
Revenue

Operating revenues:

Freight revenues $ 400,735 69.5 % $ 349,807 69.8 % $ 1,161,635 71.0 % $ 1,017,003 68.5 %

Freight-related
revenues

140,923 24.4 % 129,520 25.9 % 387,881 23.7 % 396,666 26.7 %
All other revenues 35,269   6.1 % 21,675   4.3 % 86,952   5.3 % 71,324   4.8 %
Total operating revenues $ 576,927   100.0 % $ 501,002   100.0 % $ 1,636,468   100.0 % $ 1,484,993   100.0 %
 

Operating expenses:

Labor and benefits(a) $ 167,929 29.2 % $ 156,235 31.2 % $ 496,128 30.3 % $ 475,297 32.0 %
Equipment rents 33,291 5.8 % 36,778 7.3 % 100,399 6.1 % 113,634 7.7 %
Purchased services(b) 68,562 11.9 % 50,991 10.2 % 176,358 10.8 % 149,125 10.0 %

Depreciation and
amortization

64,222 11.1 % 50,841 10.2 % 186,509 11.4 % 151,095 10.2 %

Diesel fuel used in
train operations

34,535 6.0 % 30,134 6.1 % 105,718 6.5 % 83,851 5.7 %

Electricity used in
train operations

765 0.1 % 3,226 0.6 % 6,072 0.4 % 9,895 0.7 %

Casualties and
insurance

10,624 1.8 % 9,252 1.9 % 33,346 2.0 % 28,814 1.9 %
Materials 30,664 5.3 % 19,678 3.9 % 77,861 4.8 % 62,662 4.2 %
Trackage rights 22,632 3.9 % 22,781 4.5 % 66,652 4.1 % 64,509 4.3 %

Net (gain)/loss on sale
and impairment of
assets(c)

(315 ) (0.1 )% (524 ) (0.1 )% (1,096 ) (0.1 )% 11,993 0.8 %
Restructuring costs 2,628 0.5 % 223 % 8,744 0.5 % 6,320 0.4 %
Other expenses(d) 29,901   5.2 % 29,536   5.9 % 89,494   5.5 % 91,757   6.2 %
Total operating expenses $ 465,438   80.7 % $ 409,151   81.7 % $ 1,346,185   82.3 % $ 1,248,952   84.1 %
 
 
(a) Includes $0.4 million and $3.2 corporate development and related costs for the three and nine months ended September 30, 2017, respectively, primarily associated with severance costs related to the integration of the Providence & Worcester Railroad Company (P&W). Includes $0.3 million and $0.4 million corporate development and related costs for the three and nine months ended September 30, 2016, respectively.
(b) Includes $0.1 million and $0.4 million corporate development and related costs for the three and nine months ended September 30, 2017, respectively.
(c) Includes an impairment charge of $13.0 million associated with an Australia iron ore customer entering into voluntary administration for the nine months ended September 30, 2016.
(d) Includes $1.2 million and $7.2 million corporate development and related costs for the three and nine months ended September 30, 2017, respectively, primarily associated with the acquisition and integration of Pentalver as well as expenses related to ongoing corporate development projects and projects that are no longer active. Includes the write-off of accounts receivable of $8.1 million associated with an Australia iron ore customer entering into voluntary administration for the nine months ended September 30, 2016. Includes $4.0 million and $6.9 million corporate development and related costs for the three and nine months ended September 30, 2016, respectively.
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
NORTH AMERICAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
2017   2016 2017   2016
Amount  

% of
Revenue

Amount  

% of
Revenue

Amount  

% of
Revenue

  Amount  

% of
Revenue

Operating revenues:

Freight revenues $ 242,968 76.2 % $ 232,247 74.9 % $ 719,622 75.4 % $ 681,154 74.5 %

Freight-related
revenues

60,286 18.9 % 62,124 20.0 % 186,814 19.6 % 184,627 20.2 %
All other revenues 15,673   4.9 % 15,823   5.1 % 47,641   5.0 % 48,766   5.3 %
Total operating revenues $ 318,927   100.0 % $ 310,194   100.0 % $ 954,077   100.0 % $ 914,547   100.0 %
 

Operating expenses:

Labor and benefits(a) $ 102,784 32.2 % $ 97,426 31.4 % $ 315,210 33.1 % $ 295,603 32.3 %
Equipment rents 12,623 4.0 % 14,207 4.6 % 39,993 4.2 % 43,481 4.8 %
Purchased services(b) 15,254 4.8 % 15,207 4.9 % 45,350 4.8 % 47,171 5.2 %

Depreciation and
amortization

40,036 12.6 % 37,085 12.0 % 117,822 12.3 % 110,398 12.1 %

Diesel fuel used in
train operations

16,934 5.3 % 14,217 4.6 % 54,038 5.7 % 41,578 4.5 %

Casualties and
insurance

8,488 2.7 % 6,145 2.0 % 26,532 2.8 % 20,398 2.2 %
Materials 11,889 3.7 % 12,222 3.9 % 38,413 4.0 % 38,168 4.2 %
Trackage rights 10,025 3.1 % 9,047 2.9 % 28,732 3.0 % 26,799 2.9 %

Net gain on sale and
impairment of assets

(110 ) % (456 ) (0.1 )% (870 ) (0.1 )% (851 ) (0.1 )%
Restructuring costs 316 0.1 % 111 % 384 % 805 0.1 %
Other expenses(c) 18,577   5.8 % 17,830   5.7 % 59,206   6.2 % 54,843   6.0 %
Total operating expenses $ 236,816   74.3 % $ 223,041   71.9 % $ 724,810   76.0 % $ 678,393   74.2 %
Operating income $ 82,111   $ 87,153   $ 229,267   $ 236,154  

Expenditures for
additions to property &
equipment, net of grants
from outside parties

$ 41,713 $ 30,343 $ 105,940 $ 95,282
 
 
(a) Includes $0.4 million and $3.1 million corporate development and related costs for the three and nine months ended September 30, 2017, respectively, primarily associated with severance costs related to the integration of the P&W. Includes $0.1 million and $0.2 million corporate development and related costs for the three and nine months ended September 30, 2016, respectively.
(b) Includes $0.1 million corporate development and related costs for the nine months ended September 30, 2017.
(c) Includes $0.2 million and $4.2 million corporate development and related costs for the three and nine months ended September 30, 2017, respectively, primarily associated with ongoing corporate development projects as well as projects that are no longer active. Includes $1.0 million and $3.0 million corporate development and related costs for the three and nine months ended September 30, 2016, respectively.
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
AUSTRALIAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
2017   2016 2017   2016
Amount  

% of
Revenue

Amount  

% of
Revenue

Amount  

% of
Revenue

  Amount  

% of
Revenue

Operating revenues:

Freight revenues $ 66,404 81.8 % $ 29,219 54.0 % $ 191,031 82.3 % $ 80,390 49.9 %

Freight-related
revenues

12,880 15.8 % 23,523 43.4 % 36,089 15.6 % 76,142 47.2 %
All other revenues 1,986   2.4 % 1,408   2.6 % 4,866   2.1 % 4,699   2.9 %
Total operating revenues $ 81,270   100.0 % $ 54,150   100.0 % $ 231,986   100.0 % $ 161,231   100.0 %
 

Operating expenses:

Labor and benefits $ 17,618 21.6 % $ 16,753 30.9 % $ 52,447 22.7 % $ 49,321 30.6 %
Equipment rents 1,480 1.8 % 1,559 2.9 % 4,215 1.8 % 4,884 3.0 %
Purchased services 7,139 8.8 % 6,083 11.2 % 19,821 8.5 % 17,432 10.8 %

Depreciation and
amortization

15,753 19.4 % 7,129 13.2 % 45,915 19.8 % 21,018 13.0 %

Diesel fuel used in
train operations

6,003 7.4 % 5,467 10.1 % 18,913 8.2 % 14,042 8.7 %

Casualties and
insurance

1,367 1.7 % 1,938 3.6 % 4,219 1.8 % 5,026 3.1 %
Materials 3,398 4.2 % 2,744 5.1 % 8,629 3.7 % 8,033 5.0 %
Trackage rights 3,500 4.3 % 2,884 5.3 % 10,392 4.5 % 7,201 4.5 %

Net (gain)/loss on sale
and impairment of
assets(a)

(37 ) % 10 % (59 ) % 12,992 8.1 %
Restructuring costs % 73 0.1 % 338 0.1 % 789 0.5 %
Other expenses(b) 2,773   3.4 % 5,138   9.5 % 7,471   3.2 % 18,491   11.5 %
Total operating expenses $ 58,994   72.6 % $ 49,778   91.9 % $ 172,301   74.3 % $ 159,229   98.8 %
Operating income $ 22,276   $ 4,372   $ 59,685   $ 2,002  

Expenditures for
additions to property &
equipment, net of grants
from outside parties

$ 4,545 $ 2,440 $ 9,721 $ 8,094
 
 

(a)

Includes an impairment charge of $13.0 million associated with an iron ore customer entering into voluntary administration for the nine months ended September 30, 2016.
(b) Includes $0.5 million and $0.3 million credits (corporate development and related costs) for the three and nine months ended September 30, 2017, respectively, associated with a refund. Includes $3.0 million and $3.9 million corporate development and related costs for the three and nine months ended September 30, 2016, respectively. Includes the write-off of accounts receivable of $8.1 million associated with an iron ore customer entering into voluntary administration for the nine months ended September 30, 2016.
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
U.K./EUROPEAN OPERATIONS SELECTED CONSOLIDATED FINANCIAL INFORMATION
(dollars in thousands)
(unaudited)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
2017   2016 2017   2016
Amount  

% of
Revenue

Amount  

% of
Revenue

Amount  

% of
Revenue

Amount  

% of
Revenue

Operating revenues:

Freight revenues $ 91,363 51.7 % $ 88,341 64.6 % $ 250,982 55.8 % $ 255,459 62.4 %

Freight-related
revenues

67,757 38.3 % 43,873 32.1 % 164,978 36.6 % 135,897 33.2 %
All other revenues 17,610   10.0 % 4,444   3.3 % 34,445   7.6 % 17,859   4.4 %
Total operating revenues $ 176,730   100.0 % $ 136,658   100.0 % $ 450,405   100.0 % $ 409,215   100.0 %
 

Operating expenses:

Labor and benefits(a) $ 47,527 26.9 % $ 42,056 30.8 % $ 128,471 28.4 % $ 130,373 31.8 %
Equipment rents 19,188 10.9 % 21,012 15.4 % 56,191 12.5 % 65,269 15.9 %
Purchased services(b) 46,169 26.1 % 29,701 21.7 % 111,187 24.7 % 84,522 20.7 %

Depreciation and
amortization

8,433 4.8 % 6,627 4.9 % 22,772 5.1 % 19,679 4.8 %

Diesel fuel used in
train operations

11,598 6.6 % 10,450 7.7 % 32,767 7.3 % 28,231 6.9 %

Electricity used in
train operations

765 0.4 % 3,226 2.4 % 6,072 1.3 % 9,895 2.4 %

Casualties and
insurance

769 0.4 % 1,169 0.9 % 2,595 0.6 % 3,390 0.8 %
Materials 15,377 8.7 % 4,712 3.4 % 30,819 6.8 % 16,461 4.0 %
Trackage rights 9,107 5.2 % 10,850 7.9 % 27,528 6.1 % 30,509 7.5 %

Net gain on sale and
impairment of assets

(168 ) (0.1 )% (78 ) (0.1 )% (167 ) % (148 ) %
Restructuring costs 2,312 1.3 % 39 % 8,022 1.8 % 4,726 1.2 %
Other expenses(c) 8,551   4.8 % 6,568   4.8 % 22,817   5.1 % 18,423   4.5 %
Total operating expenses $ 169,628   96.0 % $ 136,332   99.8 % $ 449,074   99.7 % $ 411,330   100.5 %
Operating income/(loss) $ 7,102   $ 326   $ 1,331   $ (2,115 )

Expenditures for
additions to property &
equipment, net of grants
from outside parties

$ 6,981 $ 9,457 $ 17,446 $ 26,195
 
 
(a) Includes $0.1 million corporate development and related costs for the nine months ended September 30, 2017, associated with severance costs related to the integration of Pentalver. Includes $0.2 million corporate development and related costs for both the three and nine months ended September 30, 2016.
(b) Includes $0.1 million and $0.3 million corporate development and related costs for the three and nine months ended September 30, 2017, respectively, associated with the acquisition and integration of Pentalver.
(c) Includes $1.5 million and $3.3 million corporate development and related costs for both the three and nine months ended September 30, 2017, associated with the acquisition and integration of Pentalver.
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
 

Three Months Ended September 30,
2017

  North American Operations   Australian Operations   U.K./European Operations   Total Operations
Commodity Group

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Agricultural Products $ 28,699 47,588 $ 603 $ 6,059 13,163 $ 460 $ 964 777 $ 1,241 $ 35,722 61,528 $ 581
Autos & Auto Parts 6,079 9,728 625 6,079 9,728 625
Chemicals & Plastics 36,745 43,739 840 36,745 43,739 840
Coal & Coke 20,008 60,864 329 29,013 81,142 358 2,345 3,798 617 51,366 145,804 352
Food & Kindred Products 8,257 14,415 573 8,257 14,415 573
Intermodal 311 3,145 99 19,012 15,416 1,233 67,374 229,059 294 86,697 247,620 350
Lumber & Forest Products 22,204 35,846 619 22,204 35,846 619
Metallic Ores 3,703 4,667 793 11,305 8,354 1,353 15,008 13,021 1,153
Metals 26,008 34,003 765 26,008 34,003 765
Minerals & Stone 34,769 57,104 609 792 5,488 144 20,680 49,146 421 56,241 111,738 503
Petroleum Products 16,425 24,772 663 223 88 2,534 16,648 24,860 670
Pulp & Paper 28,135 42,244 666 28,135 42,244 666
Waste 6,662 14,330 465 6,662 14,330 465
Other 4,963   15,252   325         4,963   15,252   325
Totals $ 242,968   407,697   $ 596 $ 66,404   123,651   $ 537 $ 91,363   282,780   $ 323 $ 400,735   814,128   $ 492
 

Three Months Ended September 30,
2016

North American Operations Australian Operations U.K./European Operations Total Operations
Commodity Group

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Agricultural Products $ 29,367 54,024 $ 544 $ 3,909 8,624 $ 453 $ 628 652 $ 963 $ 33,904 63,300 $ 536
Autos & Auto Parts 4,358 7,035 619 4,358 7,035 619
Chemicals & Plastics 34,078 42,402 804 34,078 42,402 804
Coal & Coke 21,434 63,028 340 3,199 9,276 345 24,633 72,304 341
Food & Kindred Products 8,549 15,557 550 8,549 15,557 550
Intermodal 10 112 89 17,688 15,417 1,147 67,553 239,055 283 85,251 254,584 335
Lumber & Forest Products 21,301 35,253 604 21,301 35,253 604
Metallic Ores 3,401 4,536 750 5,516 4,846 1,138 8,917 9,382 950
Metals 24,127 31,978 754 24,127 31,978 754
Minerals & Stone 31,144 53,530 582 1,918 14,567 132 16,961 45,300 374 50,023 113,397 441
Petroleum Products 16,882 24,959 676 188 78 2,410 17,070 25,037 682
Pulp & Paper 26,897 41,721 645 26,897 41,721 645
Waste 6,213 13,420 463 6,213 13,420 463
Other 4,486   14,444   311         4,486   14,444   311
Totals $ 232,247   401,999   $ 578 $ 29,219   43,532   $ 671 $ 88,341   294,283   $ 300 $ 349,807   739,814   $ 473
 
 
* Represents physical railcars and the estimated railcar equivalents of commodities transported by metric ton or other measure, as well as intermodal units.
 

 
GENESEE & WYOMING INC. AND SUBSIDIARIES
FREIGHT REVENUES, CARLOADS AND AVERAGE REVENUES PER CARLOAD
COMPARISON BY COMMODITY GROUP
(dollars in thousands, except average revenues per carload)
(unaudited)
 

Nine Months Ended September
30, 2017

  North American Operations   Australian Operations   U.K./European Operations   Total Operations
Commodity Group

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Freight
Revenues

  Carloads*  

Average
Revenues
Per
Carload

Agricultural Products $ 92,956 157,792 $ 589 $ 17,737 43,804 $ 405 $ 3,532 3,036 $ 1,163 $ 114,225 204,632 $ 558
Autos & Auto Parts 17,019 27,705 614 17,019 27,705 614
Chemicals & Plastics 111,660 134,561 830 111,660 134,561 830
Coal & Coke 57,123 170,664 335 86,292 271,485 318 7,464 18,333 407 150,879 460,482 328
Food & Kindred Products 24,856 44,091 564 24,856 44,091 564
Intermodal 726 7,313 99 52,113 44,153 1,180 190,163 669,963 284 243,002 721,429 337
Lumber & Forest Products 64,903 105,020 618 64,903 105,020 618
Metallic Ores 10,519 13,840 760 29,595 24,114 1,227 40,114 37,954 1,057
Metals 78,681 104,496 753 78,681 104,496 753
Minerals & Stone 97,446 160,917 606 4,787 35,394 135 49,823 127,210 392 152,056 323,521 470
Petroleum Products 50,696 73,821 687 507 206 2,461 51,203 74,027 692
Pulp & Paper 79,690 120,831 660 79,690 120,831 660
Waste 19,000 39,461 481 19,000 39,461 481
Other 14,347   47,248   304         14,347   47,248   304
Totals $ 719,622   1,207,760   $ 596 $ 191,031   419,156   $ 456 $ 250,982   818,542   $ 307 $ 1,161,635   2,445,458   $ 475
 

Nine Months Ended September
30, 2016

North American Operations Australian Operations U.K./European Operations Total Operations
Commodity Group

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Freight
Revenues

Carloads*

Average
Revenues
Per
Carload

Agricultural Products $ 84,601 159,369 $ 531 $ 13,319 32,701 $ 407 $ 1,364 1,494 $ 913 $ 99,284 193,564 $ 513
Autos & Auto Parts 13,373 21,987 608 13,373 21,987 608
Chemicals & Plastics 103,569 131,636 787 103,569 131,636 787
Coal & Coke 53,311 157,943 338 10,951 26,589 412 64,262 184,532 348
Food & Kindred Products 24,956 44,969 555 24,956 44,969 555
Intermodal 12 136 88 49,305 44,360 1,111 201,001 679,693 296 250,318 724,189 346
Lumber & Forest Products 63,013 104,646 602 126 315 400 63,139 104,961 602
Metallic Ores 13,078 16,883 775 11,490 9,182 1,251 40 93 430 24,608 26,158 941
Metals 78,327 103,764 755 78,327 103,764 755
Minerals & Stone 85,440 149,093 573 5,698 47,552 120 41,977 114,610 366 133,115 311,255 428
Petroleum Products 52,335 76,410 685 578 211 2,739 52,913 76,621 691
Pulp & Paper 79,087 124,017 638 79,087 124,017 638
Waste 15,552 33,226 468 15,552 33,226 468
Other 14,500   47,235   307         14,500   47,235   307
Totals $ 681,154   1,171,314   $ 582 $ 80,390   134,006   $ 600 $ 255,459   822,794   $ 310 $ 1,017,003   2,128,114   $ 478
 
 
* Represents physical railcars and the estimated railcar equivalents of commodities transported by metric ton or other measure, as well as intermodal units.
 

Non-GAAP Financial Measures

This earnings release contains references to adjusted operating income, adjusted operating ratio, adjusted net income attributable to G&W, adjusted diluted earnings per common share (EPS), free cash flow and free cash flow attributable to G&W, which are “non-GAAP financial measures” as this term is defined in Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934. In accordance with these rules, G&W has reconciled these non-GAAP financial measures to their most directly comparable U.S. GAAP measures.

Management views these non-GAAP financial measures as important measures of G&W's operating performance or, in the case of free cash flow, an important financial measure of how well G&W is managing its assets and a useful indicator of cash flow that may be available for discretionary use by G&W. Management also views these non-GAAP financial measures as a way to assess comparability between periods. Key limitations of the free cash flow measure include the assumptions that G&W will be able to refinance its existing debt when it matures and meet other cash flow obligations from financing activities, such as principal payments on debt.

These non-GAAP financial measures are not intended to represent, and should not be considered more meaningful than, or as an alternative to, their most directly comparable GAAP measures. These non-GAAP financial measures may be different from similarly-titled non-GAAP financial measures used by other companies.

The following tables set forth reconciliations of each of these non-GAAP financial measures to their most directly comparable GAAP measure ($ in millions, except per share amounts).

Reconciliations of Non-GAAP Financial Measures

Adjusted Operating Income and Adjusted Operating Ratio

 
Three Months Ended
September 30, 2017

North
American
Operations

 

Australian
Operations

 

U.K./
European
Operations

 

Total
Operations

Operating revenues $ 318.9 $ 81.3 $ 176.7 $ 576.9
Operating expenses 236.8   59.0   169.6   465.4  
Operating income(a) $ 82.1   $ 22.3   $ 7.1   $ 111.5  
Operating ratio (b) 74.3 % 72.6 % 96.0 % 80.7 %
 
Operating expenses $ 236.8 $ 59.0 $ 169.6 $ 465.4

Corporate development and related
costs

(0.6 ) 0.5 (1.6 ) (1.7 )
Restructuring costs (0.3 )   (2.3 ) (2.6 )
Adjusted operating expenses $ 235.9   $ 59.5   $ 165.7   $ 461.1  
 
Adjusted operating income $ 83.0   $ 21.8   $ 11.0   $ 115.9  
Adjusted operating ratio 74.0 % 73.2 % 93.8 % 79.9 %
 
 

(a)

Operating income is calculated as operating revenues less operating expenses.
(b) Operating ratio is calculated as operating expenses divided by operating revenues.
 

 
Three Months Ended
September 30, 2016

North
American
Operations

 

Australian
Operations

 

U.K./
European
Operations

 

Total
Operations

Operating revenues $ 310.2 $ 54.2 $ 136.7 $ 501.0
Operating expenses 223.0   49.8   136.3   409.2  
Operating income (a) $ 87.2   $ 4.4   $ 0.3   $ 91.9  
Operating ratio (b) 71.9 % 91.9 % 99.8 % 81.7 %
 
Operating expenses $ 223.0 $ 49.8 $ 136.3 $ 409.2

Corporate development and related
costs

(1.0 ) (2.9 ) (0.3 ) (4.3 )
Restructuring costs (0.1 ) (0.1 )   (0.2 )
Adjusted operating expenses $ 221.9   $ 46.8   $ 135.9   $ 404.7  
 
Adjusted operating income $ 88.3   $ 7.4   $ 0.7   $ 96.4  
Adjusted operating ratio 71.5 % 86.4 % 99.5 % 80.8 %
 
 
(a) Operating income is calculated as operating revenues less operating expenses.
(b) Operating ratio is calculated as operating expenses divided by operating revenues.
 

Adjusted Net Income and Adjusted Diluted EPS

       
Three Months Ended September 30, 2017

Income
Before
Income Taxes

Provision for
Income Taxes

Net Income
Attributable
to G&W

Diluted EPS
As reported $ 83.9 $ (30.5 ) $ 50.2 $ 0.80
Add back certain items:
Corporate development and related costs 1.7 (0.8 ) 1.4 0.02
Restructuring costs 2.6 (0.4 ) 2.2 0.04
Unrecognized tax benefits   (3.3 ) (3.3 ) (0.05 )
As adjusted $ 88.3   $ (35.0 ) $ 50.6   $ 0.81  
 
       
Three Months Ended September 30, 2016

Income
Before
Income Taxes

Provision for
Income Taxes

Net Income
Attributable
to G&W

Diluted EPS
As reported $ 76.4 $ (19.6 ) $ 56.8 $ 0.98
Add back certain items:
Corporate development and related costs 4.3 (1.2 ) 3.1 0.05
Restructuring costs 0.2 (0.1 ) 0.2
Impact of reduction in U.K. tax rate (4.3 ) (4.3 ) (0.07 )
Q3 2016 Short Line Tax Credit   (7.8 ) (7.8 ) (0.13 )
As adjusted $ 80.9   $ (33.0 ) $ 47.9   $ 0.82  
 

Free Cash Flow & Free Cash Flow Attributable to G&W

 
Nine Months Ended
September 30,
2017   2016
Net cash provided by operating activities $ 350.4 $ 303.6
Net cash used in investing activities (232.9 ) (117.2 )
Net cash used for acquisitions/divestitures 113.0   1.3  
Free cash flow and Free cash flow attributable to G&W $ 230.4 $ 187.6
New business investments, net of grants from outside parties 3.0   8.6  
Free cash flow before new business investments $ 233.4   $ 196.2  

Contact:

Genesee & Wyoming Inc.
Michael Williams, 1-203-202-8900
G&W Corporate Communications
mwilliams@gwrr.com

NYSE: GWR